U.S. Added Only 38,000 Jobs in May. Record 94,708,000 Americans Not in Labor Force…

The failure of big-government socialism

Fewest jobs created since September 2010, dimming prospects for Fed interest-rate increase this month

By HARRIET TORRY, Updated June 3, 2016

WASHINGTON—U.S. companies hired at the slowest pace in more than five years in May, clouding the outlook for Federal Reserve officials as they prepare to debate increasing short-term interest rates at a policy meeting this month.

The unemployment rate, which is obtained from a separate survey of U.S. households, fell to 4.7% in May from 5.0% in April as fewer people looked for work. Economists surveyed by The Wall Street Journal had predicted payrolls would rise by 158,000 and the unemployment rate would hold steady.

May’s weak job growth and the revisions bring the average monthly job gains in the past three months to 116,000, a sharp slowdown from the average 219,000 growth over the prior 12 months.

“This was an unqualified dud of a jobs report,” said Curt Long, chief economist at the National Association of Federal Credit Unions, noting “the unemployment rate fell, but for the wrong reason as labor force participation declined for the second consecutive month.” The share of Americans participating in the labor force fell to 62.6% in May, down 0.2 percentage point from April.

One bright spot in the report was wage growth. Average hourly earnings of private-sector workers rose by 5 cents or 0.2% to $25.59. From a year earlier, hourly wages have risen by 2.5%, higher than the 2.1% average during the roughly seven-year expansion.

Still, the report indicated a softening of the labor market and a potential weakening of the domestic outlook despite a series of positive indicators like higher consumer spending in recent weeks.

May’s weaker-than-expected report is the last major gauge of job-market health before the Fed’s June 14-15 meeting. It leaves Fed policy makers with a difficult decision regarding the strength of the domestic economy as officials debate whether to increase borrowing costs for the first time in half a year, and only the second time in a decade.

Friday’s data knocked down expectations for a Fed interest-rate increase at this month’s meeting. Investors on Friday saw roughly a 3.8% chance that the Fed would raise rates in June, down from nearly 21% a day earlier, according to fed-fund futures tracked by CME Group.

Fed Chairwoman Janet Yellen said late last month that an increase in short-term interest rates would be appropriate “probably in the coming months” if the economy continues its upward trajectory. The strength of the labor market plays an important role in the Fed’s decision, alongside inflation and economic growth.

Gauges of consumer sentiment, which are crucial in an economy where consumer spending accounts for about two-thirds of output, have sent mixed signals in recent weeks.

The Conference Board’s consumer-confidence index fell to its lowest level in six months in May. A separate measure of U.S. household optimism, however, rebounded in May. The University of Michigan said last week its consumer-sentiment index was 94.7 in May, an 11-month high and up sharply from an April reading of 89.

U.S. auto sales shifted downward in May, largely due to fewer selling days in the month, but some prominent dealers have voiced concerns about underlying demand despite low interest rates and cheap gasoline and after several years of market growth.

Jobs growth in May was concentrated in the private sector, which added 25,000 jobs, while government payrolls grew by 13,000.

Payrolls in the telecommunications industry were down 37,200 from April due in part to a Verizon Communications Inc. strike throughout the survey period.

But payrolls were weak even without the Verizon impact, with soft readings in manufacturing, transportation and temporary-help services. The mining industry continued to suffer the effects of low energy prices and shed 10,200 jobs. The construction sector also posted the second consecutive month of decline, shedding 15,000 jobs. The education and health sector added 67,000 jobs.

In May, 7.4 million workers who wanted a job couldn’t find one. And a broad measure of unemployment that includes Americans stuck in part-time jobs or too discouraged to look for work held steady at 9.7%, unchanged from April.

Quotes & Notes

"Terrorism flourishes because they are protected by a Left-wing denial industry" . --- author unknown

"Facts are rarely allowed to contaminate the big-government utopian delusion of the Left" -- author unknown

"Without double standards, the Left/Statists/Liberals would have no standards at all" -- author unknown

"The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau. What an alluring utopia! What a noble cause to fight!" -- Ludwig von Mises (1881-1973) Economist and social philosopher

"And what is Fascism? Fascism is private ownership, private enterprise, but total government control and regulation. Well, isn’t this the liberal philosophy?

Liberals value theory over truth and facts

The conservative, so-called, is the one that says ‘less government, get off my back, get out of my pocket, and let me have more control of my own destiny.'" -Ronald Reagan

"Liberals sense of moral righteousness doesn't come from achievement - it comes from believing that you are a bad person... for a Liberal to be morally superior, they must paint Conservatives as morally inferior, even if they have to lie. It's an unearned sense of moral superiority."

"The left no longer makes arguments about policies' effectiveness. Their only argument is character assassination"

"The religion of Leftism supersedes the law, fairness or personal integrity."

"...liberals are big fans of freedom speech, freedom of expression, freedom of anything and everything - unless, of course, they disagree with whatever the “anything or everything” is." - Adam Corolla

"I have never understood why it is 'greed' to want to keep money you've earned, but not greed to want to take someone else's money". - Thomas Sowell

"Have I not destroyed my enemy when I have made him into my friend?" -Abraham Lincoln

"The most intolerant people I've ever met are those Liberals who consider themselves most tolerant." -MB

"Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children’s children what it was once like in the United States where men were free."

"Well, the trouble with our liberal friends is not that they are ignorant, but that they know so much that isn’t so." -Ronald Reagan

"The problem with Socialism (Liberalism) is that eventually, you run out of other peoples money" - Margaret Thatcher

"If you think criminals and lunatics are going to obey gun control laws, you're a special kind of stupid" -MB

"One thing you have to say about the Left: They never miss an opportunity to let the mask of hatred slip. It’s practically Pavlovian; they are so invested in the myth of their own righteousness that their “tolerance” fetish goes right out the window whenever they suffer the slightest affront to their delusional notion of how the world works." - Michael Walsh